Manav Patnaik: Steve, I just wanted to get your latest thoughts on, I think, the additional inorganic opportunities you called out earlier in the call. I mean, you obviously have a super solid balance sheet, cash is piling up. Just is it going to be more larger deals, a bunch of midsized deals? How do you think about what we should be thinking about when you mentioned that?
Steve Hasker: Yes, Manav, thanks. We don’t need or particularly want larger deals. I mean, if something came along that we thought was very much in the interest of our customers and our shareholders, then we wouldn’t hold back. But we don’t sit here and sort of say, it’d be great to do sort of some larger, more transformative deals. We don’t want them, and we don’t think we need them. So it’s more in that sort of in the category of a SurePrep, which we’re very excited about. We think Dave and his team have done a wonderful job of both continuing to accelerate that business and also integrating into TR, so different areas. I mean, building on Casetext, if there are other generative AI capabilities we can add that accelerate our progress into legal workflow software, Tax & Accounting automation is something building on SurePrep that we’re always looking out for under Elizabeth Beastrom’s leadership.
And then the other areas that Dave Larson and the team have, I think, gotten in — gotten us all very well educated and keen to sort of look for opportunities is Risk, Fraud & Compliance, building upon the CLEAR and TR’s starting point. And we really need to find the right one there. So no promises as to what we might do in the short term. And the other area that builds upon our core capabilities, our content and our relationships with general counsels and heads of tax is ESG. And so we’ll continue to look at ESG. But as always, no promises. We’re going to keep the bar really high for those deals and make sure that they’re beneficial to our shareholders.
Manav Patnaik: And then, Mike, just to follow up on your margin commentary. I guess that 75 basis points you talked about, that is before the dilution from the deals you called out, is that correct?
Mike Eastwood: That’s correct. Really kind of 2 components there, Manav, that we were addressing roughly, the 80 basis points cumulative dilution for the M&A activity as we head into 2024. And then I was mentioning our current intent to reinvest the operating leverage of 75 basis points. So 2 separate components there.
Operator: Our next question will come from Andrew Steinerman with JPMorgan. Please go ahead.
Andrew Steinerman: I think I heard a comment earlier in the call that net realized price for all Thomson was about 30 basis points to 40 basis points better in ’23 than ’22. So just tell me, did I hear that right? And then if you can just tell us what net realized price is trending in ’23 overall and some of the color in the segments.
Mike Eastwood: Yes, Andrew, you heard that correctly. It’s approximately 30 basis points to 40 basis points incremental in ’23 versus ’22. If you look at total TR firm-wide, we’re in the 3% to 3.5% range, Andrew, for total TR, which varies by segment. I’ve shared in prior calls that the higher price realization normally happens in our Tax & Accounting Professionals business followed by Corporates and then Legal. That’s going to sequentially how from high to low in regards to the annual price increases. And to my comment earlier, those annual price increases, the realized price increase is influenced by the multiyear nature and when those contracts come up for renewal. So quick answer, 30 to 40 basis points higher in ’23 versus ’22 then on average, roughly 3% to 3.5% for total TR.
Andrew Steinerman: Right. Anything interesting in news or print in terms of pricing?
Mike Eastwood: It certainly varies. If you think about the new — the Reuters business, you have to break it into 2 components, the LSEG contract and then all other components. We have a contractual calculation that’s driven by CPI and FX movements for the LSEG contract, which varies year-to-year. And then others within Print business, depending on the print titles, there’s quite a wide distribution for price increases for print.
Operator: Our next question will come from Toni Kaplan with Morgan Stanley. Please go ahead.
Toni Kaplan: Just regarding Casetext, have you been able to retain the people that you want to keep so far? And are you keeping Casetext separately like so that they can continue innovating there? Or is the plan to integrate them into the larger organization?
Steve Hasker: Toni, both with Casetext and SurePrep, we’re close to batting 1,000 so far in terms of keeping the talent. So we’re thrilled with that. And we’ll just keep focusing on it, making sure that those folks see the opportunity here and both in terms of our purpose and their own career opportunities. But so far, I would say it’s been really exciting from that point of view. I mentioned in my remarks, we are — the go-to-market with Casetext, where we have integrated that. We’re in the process of integrating that, completing that integration into Paul Fischer’s teams. That’s going well. And that obviously provides more career development opportunities for the go-to-market executives within Casetext. David Wong is working closely with Jake Heller on the product side in conjunction with engineering and labs to make sure that we at TR move our Casetext speed and continue to do so.
And in the first few months, we are very much on track with that and made in my comments — I made the comment that our teams have moved with the speed and decisiveness never seen before at TR. So we’re off to a good start, and it’s up to us, Toni, just to continue that trajectory.
Toni Kaplan: And then just for my follow-up, just looking at your clients, maybe corporates or law firms, anything to discuss with regard to sort of budgets going into the end of the year and how you’re thinking about just pressure on the given macro uncertainty or like into the end of the year and then into next year?
Steve Hasker: Yes. So with regard to the law firms, our Legal business has held up well in 2023, notwithstanding a reduction in billable hours for many of our customers’ capital markets and corporate dividends. So they’ve seen fewer equity and debt raisings, less M&A transactions flowing through their billable hours. However, their litigation practices, their restructuring practices and 1 or 2 other areas have to varying degrees picked up the slack. And so that part of our business has remained robust as has Tax & Accounting. When you go across to Corporates, that’s where the elongated sales cycles have hurt us. And we mentioned that probably 4 or 5 quarters ago, and it’s continued. It’s not getting worse, but we don’t see it getting better either.
So we’re monitoring it carefully. And the other comment I’d make is Laura Clayton McDonnell is now 6 months into her role as President. So I think as we enter into next year, no matter what the macro environment brings, some of the moves that Laura is making and her leadership, I think, will start to reflect in our — in the impact we’re making with our corporate customers.
Operator: Our next question will come from Maher Yaghi with Scotiabank. Please go ahead.
